Continental raises 2026 outlook after strong third quarter in its tire business
The Hanover group, now focused on tires, lifted its margin and free cash flow targets. Its finance chief warned that higher raw-material prices will weigh more in the fourth quarter.
Continental raised its outlook for 2026 on 4 November after its tire business delivered a strong third quarter. Adjusted EBIT rose 6.7% to EUR 514 million and the adjusted EBIT margin improved to 14.9% from 13.9% a year earlier.
For continuing operations, the Hanover-based group now expects an adjusted EBIT margin of around 13.4% to 14.0%, up from 12.0% to 13.5%, and adjusted free cash flow of around EUR 1.0 billion to 1.3 billion, up from EUR 0.7 billion to 1.1 billion.
The quarter in numbers
Consolidated sales from continuing operations fell to EUR 3.5 billion from EUR 3.9 billion. Continental said the decline was mainly due to the sale of its Original Equipment Solutions (OESL) business area in early February 2026. Organically, sales fell 1.5%. wallstreet:online calculated the reported decline at 11.4%.
Net income for continuing and discontinued operations was EUR 349 million, compared with a loss of EUR 756 million a year earlier, when special effects from the Aumovio spin-off and the OESL sale preparations weighed on results. Adjusted free cash flow for continuing operations fell 69% to EUR 31 million.
Chief executive Christian Kötz said in the statement that the company now expects the earnings margin and free cash flow for the year to exceed its initial projections. The sales range was narrowed to around EUR 13.5 billion to 13.9 billion, from EUR 13.2 billion to 14.2 billion.
Europe is the earnings backbone
Continental now reports its tire business in three regions. EMEA sales were stable at EUR 1.9 billion, with an adjusted EBIT margin of 18.7% versus 17.7%, helped by ultra-high-performance (UHP) winter tires and truck tires. The company said it delivers more than 95% of tire orders to European dealers within 24 hours.
The Americas region recorded sales of EUR 1.1 billion, down 5.0%, because of weak replacement markets, although its margin edged up to 8.7%. Asia-Pacific grew 4.7% to EUR 476 million with an 18.6% margin, driven by original-equipment business with carmakers.
Headwinds ahead
Chief financial officer Roland Welzbacher warned in the statement that higher raw-material prices are increasingly affecting earnings and will weigh even more in the fourth quarter. In August, Reuters reported that he expected the raw-material tailwinds of the first half to reverse in the second half.
Vehicle production is also soft. Continental said global automotive production fell about 1.6% in the third quarter, with Europe broadly flat, North America down 5% and China down 6%.
ContiTech and UHP expansion
ContiTech, which Continental plans to sell and reports as a discontinued operation, posted sales of EUR 1.1 billion. The group lowered its ContiTech expectations to sales of around EUR 4.2 billion to 4.4 billion and an adjusted EBIT margin of 6.5% to 7.5%, citing weak demand, slow market recovery and higher raw-material costs, while noting encouraging order intake in the trading business.
To support growth, Continental plans to add more than 650 new UHP tire specifications of 18 inches and above by the end of 2027. UHP tires made up 62% of Continental brand passenger-car tire sales in 2025, up from 49% in 2020. The German EQS announcement was also published via Deutsche Börse.
What it means for European founders and investors
Continental's transformation from a broad automotive supplier into a focused tire company is one of the biggest restructurings in German industry, following the Aumovio spin-off and the OESL sale. The results show that a slimmer, premium-focused business can raise margins even as carmakers struggle.
For mobility and industrial tech startups, the details matter: demand is shifting towards larger tires for SUVs and electric vehicles, Chinese carmakers entering Europe are becoming customers, and raw-material costs are rising again. That creates openings for materials, recycling and supply chain software companies. For more on the sector, see our coverage of Mercedes-Benz, Volkswagen and Audi.
What happens next
Continental faces a tougher fourth quarter as raw-material costs rise, while the planned ContiTech sale remains the next major step in its portfolio overhaul.
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